Funding a Trust: What Does This Entail?

Creating a Revocable Trust is a two-step process. Working with an attorney to draft the actual trust agreement is step one. The trust agreement is essentially an instruction manual for managing the trust assets. Transferring your assets into the trust—or retitling—is step two. Until you transfer ownership of your assets to the trust, the trust agreement will not work the way you intended.

The type of asset determines how it is transferred into the trust. Here is a general description of how ownership is transferred for some of the most common types of assets.

Bank Accounts
Bank accounts, such as your savings, checking, and money market accounts need to be titled to your trust. This requires that your existing account be retitled to your trust name. In some cases, your bank might require that the existing accounts in your name be closed and new accounts in the trust’s name opened. For Certificates of Deposit (CDs), the account needs to be retitled to the name of your trust, and on rare occasions you may have to wait for them to mature before making changes so as not to encounter any early-withdrawal penalties. Each bank has its own process for handling this.

Real Estate
Most typically, a deed of transfer is used to transfer real property into the trust name. Real estate transfers—with potential tax implications and other fees—can be a bit more complicated. Keep in mind that real estate transfer requirements are going to be state specific. Proceed carefully with real estate transfers or invest in some professional assistance.

Personal Property with Title
Personal property that is titled with the state—for example cars, boats, and RVs—will need to be assigned to the trust. If retitling to the trust name, it is important to first find out if the transfer will result in significant taxes or fees. In this case, you may want to explore other options.

Life Insurance
Your trust should be named the beneficiary of your life insurance policy. In some cases, you may choose to leave someone not named in your trust as a beneficiary in which case you would name that specific person as the beneficiary, but then it is important to name a contingent beneficiary in case that person predeceases you.

Meet with a Virginia Estate Planning Attorney
Wilson Law PLC has experience helping people create and fund their revocable trusts. Call Wilson Law PLC today at 866-603-5976 to set up a meeting or fill out our contact form and we’ll call you to schedule your meeting.